This subheading, consisting of § 14-201 through § 14-214, may be known as the Tax Increment Financing Act.

(a) In this subtitle the following words have the meanings indicated, unless the context clearly indicates another or different meaning or intent.

(b) "Act" means the Tax Increment Financing Act.

(c) "Adjusted assessable base" means, for real property that qualifies for a farm or agricultural use under § 8-209 of the Tax - Property Article, the fair market value of the property without regard to its agricultural use assessment as of January 1 of that year preceding the effective date of the resolution creating the development district under § 14-206 of this subtitle.

(d) "Assessable base" means the total assessable base of all real property in a development district subject to taxation as determined by the Supervisor of Assessments.

(e) (1) "Assessment ratio" means any real property tax assessment ratio, however designated or calculated, which is used or applied under applicable general law in determining the assessable base.

(2) "Assessment ratio" includes the assessment percentage as provided under § 8-103(c) of the Tax - Property Article.

(f) "Bonds" or "bond" means any revenue bonds or bond, notes or note, or other similar instruments or instrument issued by any municipality or county pursuant to and in accordance with this subtitle.

(g) "Chief executive officer" means the president, chairman, mayor, or other chief executive officer of a municipality or county.

(h) "County" means one of the 23 counties of Maryland.

(i) "Development" includes new development, redevelopment, revitalization, and renovation.

(j) "Development district" means a contiguous area designated by a resolution.

(k) "Original assessable base" means the assessable base as of January 1 of that year preceding the effective date of the resolution creating the development district under § 14-206 of this subtitle.

(l) "Original full cash value" means the dollar amount which is determined by dividing the original assessable base by the assessment ratio used to determine the original assessable base.

(m) "Original taxable value" means for any tax year the dollar amount that is the lesser of:

(1) The product of the original full cash value times the assessment ratio applicable to that tax year;

(2) The original assessable base; or

(3) If an adjusted assessable base applies, then the "original taxable value" is the adjusted assessable base.

(n) "Tax increment" means for any tax year the amount by which the assessable base as of January 1 preceding that tax year exceeds the original taxable value.

(o) "Tax year" means the period from July 1 of a calendar year through June 30 of the next calendar year.

In addition to whatever other powers it may have and notwithstanding any limitation of law, any municipality or county may borrow money by issuing and selling bonds, at any time and from time to time, for the purpose of financing the development of an industrial, commercial, or residential area. This subtitle is self-executing and it shall not be necessary for any such municipality or county to effect any amendment of its charter in order to exercise the powers granted hereunder. This subtitle does not apply in Baltimore City.

Bonds shall be payable from the special fund described in § 14-206(3)(ii) of this subtitle and the governing body of the issuer may also pledge its full faith and credit or establish sinking funds, establish debt service reserve funds, or pledge other assets and revenues towards the payments of the principal and interest.

All proceeds received from any bonds issued and sold pursuant to this subtitle shall be applied solely for:

(1) The cost of purchasing, leasing, condemning, or otherwise acquiring land or other property, or an interest in them, in the designated development district area or as necessary for a right-of-way or other easement to or from the development district area;

(2) Site removal;

(3) Surveys and studies;

(4) Relocation of businesses or residents;

(5) Installation of utilities, construction of parks and playgrounds, and other necessary improvements including streets and roads to, from, or within the development district, parking, lighting, and other facilities;

(6) Construction or rehabilitation of buildings provided that such buildings are to be devoted to a governmental use or purpose;

(7) Reserves or capitalized interest;

(8) Necessary costs of issuing bonds; and

(9) Payment of the principal and interest on loans, money advanced, or indebtedness incurred by a county or municipality, for any of the purposes set out in this section.

Before issuing these bonds, the governing body of the issuer shall:

(1) Designate by resolution a contiguous area within its jurisdiction as a "development district". If the governing body of a county designates an area which is wholly or partly within the corporate limits of a municipality, a resolution of the governing body of the municipality, approving the district, is also required to establish the district.

(2) Receive from the supervisor of assessments a certification as to the amount of the original assessable base, or if applicable, the adjusted assessable base.

(3) Pledge that until the bonds have been fully paid or thereafter, the property taxes on real property within the development district shall be divided as follows:

(i) That portion of the taxes which would be produced by the rate at which taxes levied each year by or for a municipality or county upon the original taxable value shall be allocated to and when collected paid into the funds of the respective taxing bodies in the same manner as taxes by or for the taxing bodies on all other property are paid.

(ii) That portion of the taxes representing the levy on the tax increment that would normally be paid to the issuing body shall be paid into a special fund to be applied in accordance with the provisions of Section 14-208. This yield shall not be considered as county or municipal taxes for the purposes of any constant yield tax limitation or State or local restriction, except for tax revenues received from residential properties in Prince George's County. No State real property taxes may be paid into the special fund.

The governing body of any county or municipality may adopt a resolution creating a special fund described in Section 14-206(3)(ii) of this subtitle with respect to a development district, even though no bonds authorized by this subtitle have been issued by such county or municipality with respect to that development district or are then outstanding. The taxes allocated to such special fund by Section 14-206(3)(ii) of this subtitle shall thereafter be paid over to such special fund, as long as such resolution remains in effect. Any taxes that could have been allocated to the special fund authorized by Section 14-206(3)(ii) of this subtitle and that have actually been set aside for that purpose, after July 1, 1980, by a county or municipality in its budget may be placed in the special fund created after that date under this section or under Section 14-206(3)(ii) of this subtitle.

(a) When no bonds authorized by this subtitle are outstanding with respect to a development district and the governing body of the county or municipality so determines, moneys in the special fund for that development district created pursuant to § 14-206(3)(ii) of this subtitle may be:

(1) Used for any of the purposes described in § 14-205 of this subtitle;

(2) Accumulated for payment of debt service on bonds subsequently issued under this subtitle;

(3) Used to pay or to reimburse the county or municipality for debt service which the county or municipality is obligated to pay or has paid (whether such obligation is general or limited) on bonds issued by the State of Maryland, or any agency, department, or political subdivision thereof, the proceeds of which have been used for any of the purposes specified in § 14-205 of this subtitle; or

(4) Paid to the county or municipality to provide funds to be used for any legal purpose as may be determined by the county or municipality.

(b) When any bonds authorized by this subtitle are outstanding with respect to a development district and the governing body of the county or municipality so determines, moneys in the special fund for that development district created pursuant to Section 14-206(3)(ii) of this subtitle may be used as provided in subsection (a) of this section in any fiscal year by the county or municipality, but only to the extent that:

(1) The amount in such special fund exceeds the unpaid debt service payable on such bonds in such fiscal year and is not restricted so as to prohibit the use of such moneys; and

(2) Such use is not prohibited by the ordinance authorizing the issuance of such bonds.

(c) The issuance of general obligation bonds pursuant to this section shall comply with appropriate county or municipal charter requirements.

A county or municipality which is not the issuing body may pledge, by written agreement, that its property taxes levied on the tax increment shall also be paid into the special fund. Such agreements shall be between the governing bodies of a county and a municipality. They shall run to the benefit of and be enforceable on behalf of any bondholder.

(a) In order to implement the authority conferred upon it by this subtitle to issue bonds, the governing body of any county or municipality shall adopt an ordinance which:

(1) Specifies and describes the proposed undertaking and states that it has complied with § 14-206 of this subtitle;

(2) Specifies the maximum principal amount of bonds to be issued; and

(3) Specifies the maximum rate or rates of interest the bonds are to bear.

(b) The ordinance described in § 14-207 of this subtitle may itself specify and prescribe, or may authorize its finance board, by resolution or ordinance, or its chief executive officer, by executive order, to specify and prescribe any of the following as it deems appropriate to effect the financing of the proposed undertaking:

(1) The actual principal amount of the bonds to be issued;

(2) The actual rate or rates of interest the bonds are to bear;

(3) The manner in which and the terms upon which the bonds are to be sold;

(4) The manner in which and the times and places that the interest on the bonds is to be paid;

(5) The time or times that the bonds may be executed, issued, and delivered;

(6) The form and tenor of the bonds and the denominations in which the bonds may be issued;

(7) The manner in which and the times and places that the principal of the bonds is to be paid, within the limitations set forth in this subtitle;

(8) Provisions pursuant to which any or all of the bonds may be called for redemption prior to their stated maturity dates; or

(9) Such other provisions not inconsistent with this subtitle as shall be determined by such legislative body to be necessary or desirable to effect the financing of the proposed undertaking.

(c) Neither the ordinance authorizing the bonds referred to herein, nor any ordinance, resolution, or executive order passed or adopted in furtherance thereof, nor the bonds themselves, shall be subject to any referendum by reason of any other State or local law, except that an ordinance authorizing the pledge of the full faith and credit of a county or municipality to the payment of principal and interest on bonds issued pursuant to this subtitle shall be subject to any applicable provisions for referendum.

The principal amount of the bonds, the interest payable thereon, their transfer, and any income derived therefrom, including any profit made in the sale or transfer thereof, shall be exempt from taxation by the State of Maryland and by the several counties and municipalities of this State but shall be included, to the extent required under Title 8, Subtitle 2 of the Tax - General Article, in computing the net earnings of financial institutions.

(a) All bonds may be in bearer form or in coupon form or may be registrable as to principal alone or as to both principal and interest. Each of the bonds shall be deemed to be a "security" within the meaning of § 8-102 of the Commercial Law Article, whether or not it is either one or a class or series or by its terms is divisible into a class or series of instruments.

(b) All bonds shall be signed manually or in facsimile by the chief executive officer of the municipality or county, and the seal of the municipality or county shall be affixed thereto and attested by the clerk or other similar administrative officer of the county or municipality. If any officer whose signature or countersignature appears on the coupons ceases to be such officer before delivery of the bonds, his signature or countersignature shall nevertheless be valid and sufficient for all purposes the same as if he had remained in office until delivery.

(c) All bonds shall mature not later than 40 years from their date of issuance.

(d) All bonds shall be sold in such manner, either at public or private sale, and upon such terms as the governing body of the municipality or county or the board of directors of an authority deems best. Any contract for the acquisition of property may provide that payment shall be made in bonds. Bonds shall not be subject to the provisions of §§ 9, 10, and 11 of Article 31 of the Annotated Code of Maryland, as amended from time to time.

This subtitle may not be construed to authorize any municipality or county to acquire any property by eminent domain.

Whenever the county or municipality, as lessor, leases its property within the development district, the property shall be assessed and taxed in the same manner as privately owned property, and the lease or contract shall provide that the lessee shall pay taxes or payments in lieu of taxes upon the assessed value of the entire property and not merely the assessed value of the leasehold interest.